August 21, 2012 / 8:07 PM / 5 years ago

TEXT-S&P: U.S. court vacates "Casper" air pollution rule

Aug 21 - Standard & Poor's Rating Services noted that the U.S. Court of
Appeals for the D.C. Circuit today vacated the Environmental Protection Agency's
(EPA) Cross State Air Pollution Rule (Casper) and the associated federal
implementation plans and remanded the rule back to the EPA. The court also
ordered the EPA to continue administering the Clean Air Interstate Rule pending
the promulgation of a valid replacement. The decision is not unexpected given
the challenges before Casper, in our opinion. We expect the decision to be
somewhat unfavorable for nonpolluting "clean" power generation fleets like those
of Exelon Corp. and Calpine Corp. and also for companies like PPL Corp.,
FirstEnergy Corp., and PSEG Inc. that have installed pollution-control equipment
across much of their generation fleets. While the ruling will alleviate
immediate pressures on the relatively less-controlled plants such as those of
Energy Future Holdings Corp., NRG Energy Inc., and GenOn Energy Inc., we see the
Mercury And Air Toxin Standards as the binding constraint by 2015. We also
expect downward pressure on 2014 forward power prices because coal-fired
generators may put some planned plant retirements on hold, resulting in reserve
margins not tightening as quickly as expected. 

RELATED RESEARCH
Why Casper, The EPA's Cross-State Air Pollution Rule, Is Spooking the 
Electricity Sector, Sept. 12, 2011


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 (New York Ratings Team)

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